Mumias Sugar has sent home all its employees after the firm went into receivership under the Kenya Commercial Bank.

The contracts of 681 active workers were terminated through a general notice issued Tuesday by receiver-manager Ponangipalli Venkata Ramana Rao.

The notice indicated that all employees’ contracts stood terminated from September 20, the date of receivership. “Any payment to the affected employees shall be dealt with in accordance with the provision of the law,” read part of the notice.

The receiver promised to engage the services of any employee on temporary basis on mutually agreeable terms until the time when the operations resume.

He also promised to give former employees priority while recruiting staff on a temporary basis until the time when the company’s operations will be revived.

But the announcement received resistance from the Kenya Union of Sugar Plantation and Allied Workers Mumias branch officials, who observed that the receiver-manager violated the Labour Laws.

The branch secretary Vitalis Makokha said the lives of over 2,000 people who worked for Mumias as management, unionisable or contracted employees have been disrupted after they were rendered jobless arbitrarily.

“These employees have salary arrears totalling to Sh1.18 billion having gone for 31 months without payment. All statutory deductions together with other payroll deductions amounting to over Sh859 million have not been remitted, and they stand as creditors,” said Mr Makokha

The union officials want the receiver manager to follow the provided legal legislation in the layoff process.

“As a union, we are ready to engage with the receiver-manager to facilitate a smooth transition to enable the company get back to operations as soon as possible. Let Mr Rao review his decision and seek amicable ways of separation,” added Mr Makokha.

But a taskforce formed by Governor Wycliffe Oparanya to look into the woes of the firm said the receiver-manager was implementing its recommendations.

The taskforce Chairman Kassim Were, who doubles as the county’s Trade Executive, said new employees will be hired on a need basis.

“There are people staying at the factory creating debts without delivering anything. The best way is to come out of the hole by laying them off,” said Mr Were.